When Auditing Contingent Liabilities,the Primary Objective at the Initial Stage

question 46

Multiple Choice

When auditing contingent liabilities,the primary objective at the initial stage of the tests is to determine

• A)the materiality of any liability.
• B)what constitutes adequate disclosure of the liability.
• C)the likelihood of the liability.
• D)the existence of the liability.

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Definitions:

European Recovery Plan

The European Recovery Plan, also known as the Marshall Plan, was an American initiative after World War II to aid Western Europe, in which the U.S. provided substantial financial assistance to rebuild European economies and prevent the spread of Soviet communism.

Potsdam

A city in Germany known for hosting the Potsdam Conference in 1945 where Allied leaders discussed post-World War II order.

Diplomatic Relations

The formal interactions between sovereign states conducted through diplomatic representatives, aiming to manage and improve mutual relations.

Berlin Airlift

A military operation in 1948-1949 where Allied forces supplied food, fuel, and essentials to West Berlin by air, circumventing a Soviet blockade during the Cold War.